USD US Dollar Daily, Weekly and Monthly Charts; Sideways Channel at 101-105; H&S; Megaphone (Expansion) Pattern Long-Term

It is a good time for another dollar dissertation. Here is a link to the previous charts of the US dollar to come up to speed with the saga. A few weeks ago, Keystone highlighted the battle on the greenback's weekly chart between the potential H&S (head and shoulders) chart pattern and the developing positive divergence. That is a good place to start.

On the dixie's (DXY; USD) weekly chart, the blue H&S remains in play. Price fails at the 102 neckline and teases the 100 psychological level and bounces. The neckline was violated hinting that the H&S will likely play out in the future. The head is 113 and neck at 102 so that is 11 points difference. Thus, the downside target for the H&S pattern is 102 minus 11 bucks or 91.

The green lines on the weekly chart, however, show the possie d in play (that was mentioned a few weeks ago). USD was loaded up with fuel to rocket higher 2 weeks ago since all the chart indicators are positively diverged (sloping higher; diverging higher against the dollar price that drops to matching or lower lows). Voila, the dollar bounces.

You can clearly see the positive divergence on the daily chart making the rally call simple. The weekly chart shows long and strong indicators so more upside on the weekly time frame is expected. Watch the RSI to see if it moves higher into bull territory above 50%, or not. If so, it verifies that a few weeks of up will continue.

Typically for a H&S pattern, price will fail at the neckline, then come up for a back kiss of the neck, sounds sexy, then a failure with price dropping to the downside target. The dollar bounces after the neckline failure but pops up through the neck and tests and overcomes the 20-wk MA at 102.68 (this will likely need a back kiss before price moves higher on the weekly basis).

The 101 to 105 multi-month sideways channel remains in play as shown by the thick purple lines on the daily chart and the thin purple lines on the weekly chart. Keystone likes purple crayons because they taste like grapes. Obviously, dollar bulls win big above 105 and dollar bears will be euphoric below one hundo one. It is noise between 101 and 105.

On the daily chart, the orange circle shows a juicy upside gap at 105-ish that needs filled so perhaps price wants to go up to finish that business before beginning the longer-term downside again. As mentioned, the green lines on the daily chart show the possie d that developed during April launching price higher. USD bounces from the lower standard deviation band, through the middle band, which is also the 20-day MA at 101.78, and up to the upper band violation. This puts the middle band at 101.78 and rising sharply on the table as a downside target.

Staying with the daily chart, you see price rallying higher each day, jumping above the 50-day MA at 102.06 that will need a back test, and the MACD line and ROC remain long and strong wanting to see more price highs on the daily basis. The RSI, histogram and stochastics, and overbot stoch's, want price to roll back over to the downside but she will not top-out until all the indicators go neggie d. Thus, the upper channel rail and juicy gap at 105 are very much in play.

The possie d on the daily and weekly charts team-up to create the rally in the dollar over the last 2 weeks that wants to continue for a few more days in the daily time frame and continue for another 1 to 4 weeks, or more, on the weekly basis.

So it looks like the US dollar has short-term oomph and 105 is the upside target over the next couple weeks. Interestingly, a rise in the dollar would jive perfectly with a pullback in the stock market as the complacent put/call ratios and the ominous utilities predict (see previous charts).

Okay, so short-term, the dollar should remain buoyant and try to float up to 105 in the coming days and couple weeks or so, but what happens after that (when the weekly chart once again forms negative divergence so a top can be called on the weekly basis)? The monthly chart will help answer that question.

Remember, trading is playing 5-dimensional chess where you must balance the time frames (minutes, hours, days, weeks, months) against each other to form the path forward for price.

The USD monthly chart shows the megaphone pattern, or expansion pattern if you prefer, in play over the last decade. It is easy to see that dixie has a date with sub 90 numbers in the long-term (months and years ahead).

For now, the dollar bulls rule the roost in the daily and weekly time frames and the RSI, histogram and ROC on the monthly chart help create the buoyancy in the buck over the last couple weeks. Note, however, the MACD line and stochastics remain weak and bleak wanting to see lower lows in the dollar as the months play out in sync with the expansion pattern that wants price to venture lower over the long-term.

The blue two-leg bull flag pattern was satisfied on the monthly chart. Price is clinging to the 20-month MA at 102.35 making a bounce or die decision. Watch the RSI on the monthly chart because when it rolls back over and drops below 50% into bear territory it will tell you that the demise of the buck is beginning and the H&S pattern on the weekly chart will begin to flex its muscles.

What does all this mumbo-jumbo mean? All this fancy talk is something you hear from used car salesmen, politicians or a guy selling refrigerators to Eskimos. Balancing the time frames for the US dollar, the expectation is for further upside in the buck for 1 to 4 weeks, perhaps a bit more, with 105 the target, in concert with US stocks dropping, but then the buck will roll back over to the downside on the longer-term basis (months ahead) to honor the weak and bleak indicators on the monthly chart.

For now, the US dollar is making a New York Comeback, as Lucinda and the Boss sing. Keystone is not trading currencies currently. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 6:09 AM EST: USD is at 103.51 teasing the highs from Thursday. It is important to see if price continues higher from here, or not, since it is testing the resistance from a few days ago. Euro drops to 1.0774. Check that, dixie is now up to 103.56. She's starting to run higher.

Note Added Thursday Morning, 5/25/23, at 5:03 AM EST: Bingo. Old guys say bingo a lot. USD 104.06. The high in the dollar a few minutes ago was 104.16.

Note Added Tuesday, 5/30/23: USD 104.44.

Note Added 5/31/23: USD 104.61 (very close to the 105 upper channel rail).

Note Added 6/1/23: USD prints a high at 104.44 then falls on its sword down to 103.44 now at 103.50.